TC Energy Corp Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
TC Energy Corp's Q3 2025 earnings call highlighted strong financial performance, strategic growth in natural gas and power sectors, and a focus on capital discipline amidst supportive policy environments. The company is capitalizing on increasing energy demand, driven by electrification, LNG exports, and data center growth, while maintaining a commitment to safety and operational excellence.
Key Financial Results
Comparable EBITDA increased by 8% year-over-year for the first nine months of the year.
CAD 8 billion of assets were successfully placed into service on schedule.
Projects with 2025 in-service dates are tracking approximately 15% under budget.
2025 net capital expenditures are expected to be at the low end of the CAD 5.5 billion to CAD 6 billion range.
The company has a clear line of sight to achieving its long-term target of 4.75 times debt to EBITDA.
Generated CAD 2.7 billion in comparable EBITDA in the quarter, a 10% increase year-over-year.
Reaffirming 2025 outlook for comparable EBITDA, expecting 7% to 9% growth from 2024 to 2025.
Anticipate delivering another year of strong performance in 2026 with year-over-year growth of 6% to 8%.
2028 comparable EBITDA outlook of CAD 12.6 billion to CAD 13.1 billion.
Equity income is expected to double from CAD 750 million today to CAD 1.6 billion by 2035.
Free cash flow is projected to grow substantially, generating nearly CAD 8 billion in net distributions by 2035.
Business Segment Results
Canada Gas EBITDA increased by CAD 68 million due to higher incentive earnings and higher depreciation.
US EBITDA increased by CAD 60 million, primarily from the Columbia Gas settlement.
Mexico business EBITDA increased primarily due to Southeast Gateway.
Power and Energy Solutions business equity income for Bruce Power was lower quarter-over-quarter due to the two-unit MCR outage program.
US natural gas business saw LNG flows increase 15% this quarter, setting a new peak delivery record of 4 Bcf per day.
Mexico network is tracking towards 100% availability year-to-date.
Bruce Power achieved 94% availability.
Capital Allocation
Announced an additional CAD 700 million in new growth projects at a weighted average build multiple of 5.9 times.
Total sanctioned projects up to CAD 5.1 billion over the last 12 months.
Sanctioned portfolio for the year now stands at an implied weighted average unlevered after-tax IRR of approximately 12.5%.
Expect to FID a series of projects by the end of next year to fill out the CAD 6 billion net annual investment allocation target through 2030.
Three-year plan requires approximately CAD 31 billion in aggregate funding, with about 80% from operating cash flows.
Remaining 20% of funding is expected to come from a combination of bond and hybrid issuances.
Investing approximately CAD 1 billion annually in Bruce Power.
Industry Trends and Dynamics
Policy environment is becoming increasingly supportive across North America.
Natural gas forecast has been revised 5 Bcf a day higher, now calling for 45 Bcf a day increase in natural gas demand by 2035.
Electrification, LNG exports, and the rapid expansion of data centers are driving increased demand.
Natural gas demand from power generation continues to accelerate.
Approximately 40 gigawatts of coal-fired generation is expected to retire over the next decade in the US.
Nearly 60% of US data center growth is expected within reach of TC Energy's asset footprint.
By 2030, the Mexican government plans to bring 8 gigawatts of new installed natural gas capacity online.
By 2050, nuclear capacity requirements in Ontario are expected to nearly triple.
By 2035, expect that 60% of North American gas production will move through TC Energy connected basins.
Competitive Landscape
TC Energy is the only operator capable of delivering natural gas to every major LNG export shoreline in Canada, the US, and Mexico.
The company moves approximately 30% of all feed gas bound for LNG export.
TC Energy is the only midstream peer with a significant interest in nuclear power generation.
After adjusting for company size, TC Energy is leading its peers in sanctioned natural gas and power capital opportunities.
TC Energy's network is delivering reliable supply at scale with over 94,000 kilometers of pipelines across North America.
Macroeconomic Environment
The Mexican economy is poised for significant expansion, driven by strong fundamentals and President Sheinbaum's Plan México 2030.
Plan México 2030 aims to attract over $270 billion in investment through public/private partnerships.
Growth Opportunities and Strategies
Focused on predominantly brownfield, in-corridor expansions that leverage the existing footprint.
Expect the steady cadence of high-quality project announcements to continue into 2026, with attractive EBITDA build multiples in the 5 times to 7 times range.
Originated growth opportunities representing CAD 17 billion of potential value within the development portfolio.
Four growth pillars: power generation, North American LNG, local distribution companies (LDCs), and North American gas production.
Proposed Ontario Pumped Storage Project is a great example of the optionality in the portfolio.
Bruce Power is uniquely positioned for growth in a market where electricity demand is expected to grow by 75% through 2015.
Initiated a Federal Impact Assessment for the potential 4,800-megawatt Bruce C Project.
Maximizing the value of existing assets through safety and operational excellence, while leveraging commercial and technological innovation.
Prioritizing low-risk, high-return growth, including placing projects in service on time and on budget or better.
Financial Guidance and Outlook
Expect EBITDA growth of 5% to 7%, with a 2028 comparable outlook of CAD 12.6 billion to CAD 13.1 billion of EBITDA.
By the end of next year, expect to FID a series of projects that will fill out the CAD 6 billion net annual investment allocation target through 2030, all with build multiples in the 5 times to 7 times range.
Three-year plan requires approximately CAD 31 billion in aggregate funding, with about 80% from operating cash flows.
Remaining 20% of funding is expected to come from a combination of bond and hybrid issuances.
No equity issuance is required to deliver this plan.
Equity income from Bruce Power is expected to double from CAD 750 million today to CAD 1.6 billion by 2035.
